Millions Added to the Cost of the SJHHS - Settlement with Developer?

A revised Settlement Agreement is on the Board agenda for Monday, March 9. The whole subject is also featured in closed session just before the public meeting. Since the Board will consider layoff notices for over 400 district employees during the same evening, it appears likely that this matter will be continued until the next meeting. But one can never be sure...

The new Agreement is a significant improvement over earlier proposals because it no longer contains a mutual release of claims. Such a release would have undermined the work of the district's own Forensic Audit of the site acquisition, as well investigations underway elsewhere.

If that were the end of the story, I would have no reservations about recommending that that CUSD accept the settlement. Subject to each Board members' own assessment of the unusual financial risk associated with issuing public debt secured by undeveloped real estate (a very unusual move), this appears to be a good compromise. After all, there are a lot of good things in the proposal for CUSD, including the property line adjustments necessary to complete the school stadium.

But nothing is ever truly free and in this instance there is the matter of $2.264 million which is owed to the City of San Juan Capistrano by the district. This appears to be related to the agreement and it has apparently fallen through the cracks!

Back when the SJHHS site was purchased, it was understood that Whispering Hills Development would be responsible for costs associated with preparation of the site, including the cost of bringing "permanent" municipal utilities to the edge of the school site. This specific language is contained in the Purchase Agreement. Furthermore, the idea of seller-provided improvements was the main district justification for the high price paid for the land ($1,040,000 per acre).

Apparently, the developer arranged for the City to present this bill directly to the school district rather than treating it as a part of the larger Whispering Hills improvement. It remains unpaid. The Settlement Agreement now proposes to apply the Whispering Hills bond money in a new way and would appear to leave CUSD with the city's bill.

If this is allowed to stand, CUSD will have to reach into its purse for the $2.264 million and the price of this high school will rise yet again! Read more!